TRIBHUVAN PRASAD CHAUDHARY ,MUMBAI vs. ITO (20)(3)(4), MUMAI

The assessee is an individual and proprietor of Rakesh Trading Company which is engaged in the business of trading of Iron Steel. The assessee filed the 2 ITA No.3812/Mum/2024 - Tribhuvan Prasad Chaudhary return of income for AY 2009-10 on 19.09.2009 declaring a total income of Rs. 2,91,714/-. The AO received information from DDIT (Inv.) that the assessee has taken accommodation entries to the tune of Rs. 2,03,40,348/- and that the parties from whom the assessee has shown the purchases are found to be non-genuine by the Sales Tax Department. The AO called on the assessee to furnish various details with regard to the alleged bogus purchases. The AO after considering the submissions of the assessee held the entire amount as bogus and added 12.5% amounting to Rs. 25,42,544/- to the income of the assessee. On further appeal, the CIT(A) upheld the addition made by the AO. The assessee is in appeal before the Tribunal against the order of the CIT(A).

The assessee has filed a petition for condonation of delay stating that the assessee being a senior citizen was not aware of the fact that the appellate order for AY 2009-10 has been passed by the CIT(A) and that only when the assessee received the appellate order for subsequent years came to know on 10.06.2024 that the order for AY 2009-10 was passed on 27.03.2024. Accordingly the assessee prayed that the delay may be condoned and the appeal be admitted for adjudication. Having heard both the parties and perused the material on record, we are of the view that there is a reasonable and sufficient cause for the delay in filing the appeal before the Tribunal. Therefore following the Hon’ble Supreme Court decision in the case of Collector, Land Acquisition Vs. MST.Katiji & Ors., (167 ITR 471) (SC) we condone the delay filing the appeal and admit the appeal for adjudication.

We heard the parties and perused the material on record. The ld. AR submitted that considering the nature of business of the assessee the GP ratio of the assessee is in the range of 3.83% and the GP ratio of 12.5% as calculated by the 3 ITA No.3812/Mum/2024 - Tribhuvan Prasad Chaudhary AO is far higher. The ld. AR further argued that the assessee has discharged the onus of proving the genuineness of the transaction by submitting all the relevant documents and therefore, the AO is not correct in treating the impugned transaction as bogus. The ld. AR also submitted that in assessee's own case for AY 2010-11 and 2011-12 (ITA No. 3813 & 3814/Mum/2024 dated 30.09.204) where a similar addition has been made, the Co-ordinate Bench has held 5% to be the GP to be applied on the alleged bogus purchases. The relevant observations of the Co- ordinate Bench in this regard are extracted as below:

During the course of hearing the revenue did not bring any material on record to controvert the submission that the facts for the year under consideration are identical and did not bring any material to support that the GP rate applied in assessee's case is not correct. Therefore, respectfully following the above decision of the Co-ordinate Bench in assessee's own case, we direct the AO to consider the addition at 5% of the alleged bogus purchases over and above the GP rate shown by the assessee and re-compute the tax liability accordingly.

In result, the appeal of assessee is partly allowed.